An Oregon judge has concluded there are serious problems with the way the state tries to take back money when it decides it has paid jobless claimants too much. However, he ruled those issues don’t rise to a level that would legally require wholesale changes in the way the program operates.

The Oregon Employment Department has been trying to recoup jobless benefits from more than 60,000 people. The agency says it paid them more than they were entitled to receive during the pandemic and its aftermath and is required by law to seek the money’s return.

The Oregon Law Center sued in 2022 on behalf of several laid-off workers. It argued that the employment department’s clawback procedures were so disorganized that they amounted to an unconstitutional infringement of workers’ right to due process.

“Plaintiffs’ counsel have done a tremendous job identifying and articulating problems with OED’s systems,” Multnomah County Circuit Court Judge Eric Dahlin wrote in his findings Friday.

Except in limited cases, though, Dahlin said the department’s problems don’t amount to constitutional violations. His ruling means that in most cases the employment department can continue setting its own rules and procedures for how it seeks to reclaim overpayments.

The ruling has no direct bearing on the agency’s most pressing current problem, delays in payments and the extreme difficulty laid-off workers are experiencing when they try to reach the employment department to address issues with their claims.

The Oregon Law Center and employment department had both asked Dahlin to issue summary judgment on the overpayments lawsuit rather than send the case to trial. They each declined comment on the ruling until they have had more time to review it.

The overpayments dispute dates to 2020, when Oregon’s unemployment insurance system was inundated by an unprecedented surge in jobless claims. Hobbled by an obsolete computer system, the agency struggled to implement new federal benefit programs meant to ease the pandemic’s economic impact.

The employment department says that it paid some laid-off workers too much. Sometimes that was because of mistakes workers made when filing their claims, but other times the agency says it was because of the employment department’s own mistakes.

State and federal law requires that the employment department take back the overpayments in many cases. Benefits recipients can contest the agency’s findings or seek a waiver.

In its suit, the Oregon Law Center argued that many people didn’t know they could challenge the overpayments because notifications were too complex.

In some cases, the employment department would send out two separate notices about overpayments, months apart. By the time the second notice arrived with details on the amount of alleged overpayment, the window to challenge the state’s finding had expired.

That kind of system is indeed unconstitutional, Dahlin ruled, but he declined to order changes because the employment department implemented a new computer system last month that did away with the two-notice system.

Dahlin did rule that the employment department had erred by offering Spanish translations of overpayment notices – but not including all the information that accompanied the English-language version of the notice.

The most consequential ruling was Dahlin’s finding that the problems at the unemployment department don’t cumulatively amount to an unconstitutional violation of claimants’ rights. As a result, he did not order sweeping changes in the employment department’s overpayment collections.

While Dahlin found the employment department’s overpayments policies mostly passed constitutional muster, he chastised the agency for poor performance and encouraged it to consider reforms proposed in the litigation.

He didn’t specify what changes he would like to see. The Oregon Law Center had proposed several reforms, including that the employment department more thoroughly explain to claimants why it is seeking to reclaim payments. It also proposed systemic changes in how the agency collects overpayments and notifies claimants of how they can dispute the department’s findings.

“Almost every issue identified by plaintiffs is of concern,” Dahlin wrote. “OED as a public agency may want to consider voluntarily implementing most of the items Plaintiffs are asking for, if it is reasonably feasible to do so.”